MGMT3347- Strategic ManAgment
Case Study Analysis
External Analysis Pumpkin Patch
What industry is it?
Pumpkin Patch (PP) is one the largest specialty company in fashionable children’s wear industry in Australia. They sell through a wide range of channels such as its own retail stores, selected department stores, and wholesale distribution and through the internet (Hanson et al. 2011). General Environment Analysis
Demographic: Australia’s population is estimated to be around 22.7 million people, UK estimated to be around 63 million people and the most populous US at about 314 million people. Also, the world’s population is aging relatively quickly. This increase in aging, however, is not distributed proportionately around the world. The developed world is aging rapidly, while the developing regions lagging behind in this trend. Economic: The market size of the apparel industry globally is about US$750 billion. In the clothing industry in New Zealand is $2.2 billion and in whole of Australia is $13 billion. In addition the market growth rate in NZ for clothing and soft goods is about 8%; in Australia the market growth for clothing is 6%. U.S clothing market was worth US$172.8 billion in 2004, $29 billion of that comes from children’s clothes (Hanson et al 2011). Socio-cultural: Consumers in countries such as Australia where the majority of the population are highly educated, increasing pressures for more information like product content and production processes is sought after. Specifically, Pumpkin Patch is well-positioned with its long history of catalogue; mail-order sales that they can present very specific descriptive information to its customer base in all its market channels including wholesale, retail stores and internet sales. Technological: The development of internet technology, mobile and wireless communication has enabled industries to internationalize its sales & operations worldwide and outsource its product manufacturing overseas in Asian countries such as Thailand, China, India, Bangladesh and even Vietnam. Global: Forces that affect the general environment globally include global competition, wars, terrorism, risk of a global financial crisis and global energy crisis (fluctuation in oil price). Political/ Legal: Issues in UK and US are the quotas to abide by Asian manufacturers. The Industry Environment (Porter’s Five Forces)
The reason for an industry analysis is to understand the dynamics and structure of the childrenswear industry and also to identify the threats and opportunities important to the firm. Threat of New Entrant (Moderate-High)
The threat of entry into the childrens clothing retail industry is moderate; because brand issues gaining path into the market is difficult. However, product sourcing is dead easy at the bottom end where brand is irrelevant such as private label. Nonetheless, one barrier to entry is product differentiation; specifically Pumpkin Patch has done well in this area as they are able to pick out winning kid’s fashion consistently by sourcing for ideas locally and internationally to meet consumer preferences. Bargaining Power of Suppliers (Low)
Suppliers exert power by increasing prices and reducing quality of their products in the clothing industry (Hanson et al 2011). Outsourcing of production to several Asian countries limits and reduces suppliers’ power. Good relationships with suppliers from throughout Asia are an advantage. Most suppliers are not dominated by a few large companies and the clothing industry is a significant customer for the suppliers. Hence, bargaining power of suppliers with regard to PP is relatively low and does not pose an issue for the firm. Threat of Substitute Products (Low)
Substitute products are goods from outside the industry that performs similar or the same function as a product that the industry produces (Hanson et al 2011). In the children wear industry; there is little or no...
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